British American Tobacco PLC on Wednesday called for ‘more appropriate’ regulation to counter illicit trade in new categories in the US and Canada, indicating that its non-combustible products had made further progress to increase profitability in the second half of 2024.
The London-based cigarette and vaping products maker also said it remained on track to meet its full-year guidance for 2024.
In a trading update, BAT said its second-half performance was driven by the phasing of new categories innovation, the benefits of investment in US commercial actions and the unwind of wholesaler inventory movements.
BAT said illicit trade in the vapour market in US and Canada persisted, but noted that it had maintained global value share leadership at 40%.
It urged for ‘more appropriate’ regulation and enforcement of New Categories, including vapour in the US and Canada. In Mexico, the company said it continued to monitor the progress of legislation, seeking to ban vapour products.
‘We are making good progress and while there is still more to do, I believe that the choices we have made and the actions we are taking through this investment year are the right way forward for BAT,’ BAT Chief Executive Oficer Tadeu Marroco said.
For glo, BAT said innovation pipeline started to drive performance acceleration in second half, driving organic volume, revenue and profit.
Velo recorded ‘strong’ volume, revenue and profit growth in the second half as the group continued to succeed to established oral markets, and strong momentum in newer launch markets including the UK and Poland.
Turning to combustibles, BAT said benefits of investment in US commercial actions in the first half of 2024 and unwind of wholesaler inventory movements, together with robust pricing across all three regions, had driven improved combustibles organic volume and financial performance in second half.
BAT is on track to deliver its 2024 guidance, BAT’s CEO Marroco said.
The company remains committed to return to its mid-term guidance of 3% and 5% revenue and mid-single digit adjusted profit from operations growth on an organic constant currency basis by 2026.
The group expects net finance costs to be £1.6 billion, while gross capital expenditure in 2024 of £600 million is projected. It guides or operating cash flow conversion in excess of 90%.
It expects global tobacco industry volume to fall 2% in 2024.
Shares in BAT were flat at 2,969.00 pence each on Wednesday morning in London, while in Johannesburg, shares were up 0.2% at R 673.97 each.
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